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I think it is a feature that is mostly for fun and satisfying curiosity. Some people use it to get a general idea of the breeding quality of male foals from a stallion. Personally, I use it mostly for the former :)

Edited to add that yes, it is just how they would have papered if you had put them through stallion papering.

I seem to remember that Ammit introduced this feature on H&J 1 several real-life years ago when we had only a few leader boards and the two that were most populated were the Extended Stallion list that included the top 250 stallions and the Extended Mare List that included the top 500 mares. The higher the papering for sires, the harder it seemed to be to get colts intact past Charlie (this was long before Mare Advice came along), because there was a really wide range of breeding abilities covered by the *Star ranking. So, yes, curiosity played a major role in people using the Gelding Papering. I wasn't in the group that had stallions near the top of the Extended List (though I did eventually have a small handful near the end of it), but I imagine that knowing how many of the sons of stallions in the exalted regions of the list would have papered *Star probably was helpful information for the breeders.